SUMMARY
This plan is bipartisan since, as Democrats require, it provides for universal coverage.
Each person has a Health Funding Account (HFA) which is supplemented by Federal
vouchers. (HFAs are similar to Republican-fostered Health Savings Accounts
(HSAs) but differ in critical ways.) Purchasing from such Accounts, together
with guaranteed-renewable private health insurance policies, the premiums of
which may be paid from the HFAs, will foster a free market in health care at the
procedure level and hence will lower cost and increase accessibility. All
citizens will be able to pay with their own funds for the high quality care
needed for their important individual needs. If treatment for the same illnesses
continue to have very different costs at different
locations in the country, individuals paying from their HFAs will demand that
the high-cost providers improve their practices.

When the plan is fully implemented, each
person will have an HFA from birth. Their HFA would be supplemented each year,
from birth to at least age 21, by a taxable federal voucher of $2000. (HSA funds are not
taxable.) During a transition period, all older individuals would also receive
vouchers which allowed for pre-existing conditions. The small number of
pre-existing conditions at birth could be handled by a high-risk pool.
Thereafter, guaranteed renewal should make it generally unnecessary for
underwriting for pre-existing conditions to be necessary. Recent innovations in
"incentive compatible" insurance should also make it possible to switch
insurance companies without need for new underwriting for pre-existing
conditions. See below for references and further discussion.

No health insurance, including
employer-funded insurance, would be
tax-advantaged.

Wage earners would be
required to fund their HFA, using after-tax dollars, at 5% of wages up to $5000/year until their HFA balance reached the
maximum total of $125,000. Additional money may be placed in the HFA at any
time. HFAs should be invested only very conservatively.

All earnings in the HFA are
fully taxable as income; this also is different from the treatment of HSAs
in current law.

The HFA savings, together with health insurance for
those under age 21, are the only mandates in the plan.

The procedures covered by
the mandated policies for those under 21 are to be at least those found in 95%
of all privately purchased policies for adults. Dental, aural, and vision care
for children can be covered by their HFA funds not used for premiums.

HFA funds may be used to pay for private
health insurance premiums. This is a change from the current law, under which
premiums cannot be paid using funds from one's HSA. Another change from present
law is that HFA funds may no longer be used for non-medical purposes. Under current law HSA
funds
may be used for non-medical purposes if a 10% fine is paid.

The health insurance policy purchased
could be of any type, including high deductible and "first
dollar". Persons over 21 could choose to purchase no
insurance at all.

At start-up, if a citizen applies for a
private health insurance policy, Federal vouchers are to be added to each person's HFA
each year to cover the 50th percentile marginal cost of any pre-existing conditions revealed by
an initial underwriting.
This would make more possible the purchase of a high-deductible,
guaranteed-renewable plan that includes those pre-existing conditions. The full
values of these vouchers would be available only to those individuals that apply at startup.
In subsequent years, the pre-existing conditions vouchers would be reduced until
being discontinued after the transition period of about 21 years.

Except for those under age 21, and for those in the
basic minimum policy (BMP) safety net, there are to be no
mandated procedures, although the Federal government should issue guidelines
that purchasers may consult.

The guaranteed-renewable policies will also be
"incentive-compatible" so that policy holders need not worry about having their
premiums raised due to insurance company competition. It is likely that
incentive-compatible policies will make it possible for policy holders to
transfer to another insurance company regardless of their health experience. Recent research bearing on
these relatively new insurance policy concepts is discussed further below.
However, here we remark that guaranteed-renewable policies are a good buy for
the healthy young. This removes the disinclination of the young to buy
community-rated policies which charge much higher rates due to the requirement
to subsidize the policies of their elders.

After the transition period, insurance companies no
longer will be required to cover pre-existing conditions for new applicants for insurance.
But, compensating for this, after the transition period, in the long run, almost all citizens will acquire their life-time policy at
birth when pre-existing conditions will be at a minimum.

Genetic testing may make it possible to
predict risk of various diseases at birth. However, this might well not lead to
different policy premiums because this knowledge itself can lead to relatively
inexpensive preventive measures, and it is further likely that, before these
illnesses manifest themselves, new treatments may emerge which will be unknown,
and hence random, at time of birth. Also, since everyone will die of some
illness, the net expense to an insurance company, over a lifetime ... which is
relevent for guarantee-renewable policies ... is likely to not vary
significantly for a very broad range of genetic profiles.

Lifetime health insurance policies solve a problem
which most other health systems experience: young workers are required to pay taxes
to fund the high expenses of older retirees. Young workers hence tend to not
purchase insurance when they are young and healthy, leading to the classic "free rider" problem.

Such policies also solve the problem of
pre-existing conditions, which most current plans solve by an individual mandate
coupled with guaranteed issue and community rating. These conditions degrade
market mechanisms and also do not eliminate the free-rider problem since
individuals, if they become ill, may change from an inexpensive policy to an
expensive policy at the annual free enrollment period which most plans afford.

Lifetime policies will obviously also
require portability across state lines, so many current restrictions on
interstate health insurance sales will have to be eased.

Premiums for high-deductible policies
might desirably be additionally subsidized by the Federal government in order to encourage
the development of a market for high-cost procedures, independent of insurance
companies or government agencies.

It is important from a
policy point of view that individuals have insurance coverage so that, due to a
serious illness, a minimal number of individuals fall into the Basic Minimum
Policy (BMP) safety net,
described below.

Employers could withhold a portion of an
employee's salary and contribute it to their HFA. They also could pay premiums
for a health insurance policy for
the employee, and could also supplement employees' childrens' HFAs and pay their
insurance premiums. Anyone could contribute to any individual's HFA.
For example, parents could contribute to their children's HFAs.

Employers could also, of course, continue
to offer smoking cessation programs, exercise facilities, etc. Such programs may
minimize sick-leave and lead to a more productive workforce.

Non-wage earners (e.g. the self-employed)
could make contributions to their HFA accounts if they so desired, but would not
be mandated to do so. This would enable them to devote all possible personal
capital to a personal venture such a non profit charity or to a new business.

More than sufficient federal funds are
available for these vouchers, and for other parts of the plan, in part because the tax
exemption for employer-provided insurance will cease. Also, taxes and fees
currently levied for Medicaid, Medicare, including Medicare B and D, and SCHIP
will
be available, since this plan replaces all of these programs. The total of these federal
and state funds is approximately 1 trillion dollars per year. This comes to
approximately $3000/person/year, including children. (Another trillion of health
care funding currently comes from employers and out-of-pocket.)

It is anticipated that
substantially less government funding than one-trillion dollars will be required
for equal results when the plan
is fully operational, because there will be a universal, fully
functioning, well-regulated free market at the procedure level.

Replacing the Medicare and Medicaid
programs, which have been achievements of the Democratic party, may well be viewed
negatively by Democrats. However, these benefits will actually still be available to
all citizens through this new approach, since the plan is universal, supplying medical
funding to every citizen.

Because of the need to replace Medicaid and Medicare, there would have to be a multi-year transition.

In brief, during a
21-year transition period, all citizens would receive a Medicaid-Medicare
transition voucher of $2000/year. (Those children born in the first transition
year would comprise a small portion of this total expense. It is possible that
some or all over-21 citizens will also receive a similar voucher after
the transition period, at the discretion of Congress.)

In addition, those
citizens who become 65 during the first transition year will also receive a
yearly Medicare transition HFA voucher sufficient to purchase a high-deductible
incentive-compatible, guaranteed renewable policy with benefits actuarially
equivalent to the median policy available on the private market. The voucher's
value would be adjusted for pre-existing conditions.

Presumably, most of the
recipients of these Medicare-transition vouchers will use them to purchase a
suitable insurance policy, but they need not do so.

During the following 21
years, each wave of citizens who become 65 will receive a similar voucher for
life, except that, for each wave, the voucher's value will be reduced approximately
linearly so that it's value will be zero for the 21st wave. For later waves
there will be no more Medicare-transition vouchers. These individuals be in
the steady state of the new system and will be able to depend on the accumulated
funds in their HFA, together with the accumulated value in their
guaranteed-renewable, incentive-compatible health insurance policy.

During the transition wage earners would
have to contribute to their HFA from their wages, as discussed above. Medicare
taxes would be continued for 21 years or possibly replaced by some other tax.

The loss of
tax-deductibility for employer contributions to health care premiums, clearly
makes the HFA system more financially progressive than the current system

The HFA may be spent only on medical
care, and procedure payments paid directly from the HFA could be only at or below the 50th
percentile in the region of the provider. Charges higher than the 50th
percentile would have to be paid out of pocket or from a health insurance
policy. After 21 years in the plan, at death, remaining funds in the HFA are to
be transferred to the owner's estate. The proportion transferred to the estate
would be prorated for years in plan less than 21.

Preventive care would be encouraged by an
additional yearly use-or-lose Federal voucher for all individuals of $200.

For those who exhaust their HFA and all
other resources, there is to be a Federal Safety Net, which will be comprised of
a Federal Basic Minimum Policy (BMP) which pays only at the 10th percentile in
the region of the provider. A
BMP will cover only those procedures which are covered by 95% of the privately
sold health policies in the US. The maximum lifetime expenditure of a BMP will
be equal to the 5th percentile of the privately sold health policies in the US.
The overall system discussed here is designed so that very few people should
require this BMP safety net.

Since insurance policies are generally
written in terms of what is not covered, a better way of characterizing what is
covered in the BMP would be to not cover anything is explicitly not covered in
5% or more of health policies. For example, if psychotherapy is explicitly not
covered in 20% of US health policies purchased in the market, it would not be
covered in the BMP.

Some citizens may not want to, or be able
to, keep track of premiums and pay them on a regular basis, and they may be
incapable of keeping track of their HFA or of a debit card. Even these
individuals, however, will be enabled to access care by, for example, simply
walking into a clinic. There the staff will be able to find their
Social Security Number, and hence their HFA and be able to show them
the dignity of enabling them to pay for their care. Even at that point, the citizen can decide
if the prospective treatment is worth the cost of the deduction from their HFA.

It is hoped that at least a substantial
segment of the citizenry would use their HFA and out-of-pocket payments to
pay directly for expenses below a high deductible. This should build a
large free market for most procedures and lead to lower cost. This would be in
preference to purchase of
low-deductible insurance, resulting in never perceiving the cost of medical care.

One benefit of this free market is that it
should draw doctors to the countryside and to inner cities to gain a market
share of the individual HFAs of patients in those locations who will be enabled
by their HFAs to, for the
first time, be able to pay what the market requires to induce
doctors in general, and general practitioners in particular, to move to the countryside or inner city.
The increase in the market should also lead more individuals to choose to study
medicine, further leading to a decline in prices, again, so long as the patients
are conscious of cost.

Very high deductible insurance, for
example at $50,000, should be encouraged to be widely marketed for the large
number, in absolute terms, of individuals who have high balances in their HFAs. Policies with a high
life-time deductible, such as $200,000, could also be usefully marketed.

Providers will compete for the high-cost
procedure business of such wealthy individuals. This competition should
determine competitive high-cost procedure prices which are currently determined
in the relatively non-competitive market of insurance company buyers.

Another market-stimulating feature for
high-cost procedures that
could be implemented by insurance companies would be to issue rebates to patients who
selected less expensive hospitals for elective
or possible future emergency surgery, such as a coronary artery bypass This idea
was first proposed by
James Pendleton in "Market Driven
Insurance and Health Savings Accounts", and could be
applied in either high or low-deductible policies.

Such rebates can be substantial,
reflecting large savings for the insurance company if a patient chooses a
low-cost hospital. Of course these savings will
likely also be reflected in lower premiums and should lead to
rationalization of the currently observed large differences in hospital charges
for identical procedures such as heart-bypass operations, even in the same
metropolitan area.
The rebates could be added to the
patient's HFA, or taken as cash if the HFA were already at the upper $125,000
limit.

In addition, insurance companies should
consider offering high-deductible policies which pay only to the 50th
percentile. Such policies could be quite low-cost. Patients could choose to augment these payments from their HFAs or
out of pocket.

Such policies would be analogous to
indemnity insurance (a form of insurance which pays a fixed amount when a
condition is diagnosed) and should also constrain costs for high-value
procedures.

This HFA-based plan has substantial
resistance to fraud. Although the HFA supplemental vouchers are funded by a
single payer, the single payer does not control costs. There is very little
rationing, all procedures currently accepted as deductible by the IRS, including
long-term care, could be purchased directly using the HFA. Providers may charge any
amount. Each person can have costs up to the 50th percentile in the neighborhood
of the provider paid with their HFA, and the induced strong competition should
reduce costs.

If patients pay with HFA, or cash, or their
lifetime insurance policy they will
not have to switch their primary care doctor or specialists as they often must
do now when required to switch PPOs or HMOs because they change jobs.

Parents are required to
purchase guaranteed renewable insurance for their children at
birth, using, if necessary, their child's voucher. High deductible policies
should be encouraged. Such a policy should, in
general, be inexpensive, and will ensure that the child's HFA retains value
past adolescence.

In contrast to high-deductible insurance,
since comprehensive, low-deductible insurance undercuts the healthcare market,
no government subsidy is suggested.

The program is designed to discourage
purchase of comprehensive insurance. If comprehensive insurance is largely
unregulated, and realistically priced, the initial tendency will likely be for
the healthy not to purchase it. The resulting adverse selection will drive up
the cost of comprehensive insurance leading in turn to fewer purchasers. This
need not lead to more ill health for the unhealthy because the HFA should enable
patients to obtain care up to the high-deductible limit of their high-deductible
policy.

Persons may pay providers directly out of
pocket to avoid spending down their HFA.

Most bills will be paid via a
third-party, strictly financial transaction, probably commonly using a debit card, with a Medical
Agent (MA) who holds the HFA account. At the point of purchase a preliminary
estimate could be immediately provided as to whether the purchase would count as
a medical expense. A record would be automatically kept of likely allowable
expenditures below the yearly high-deductible limit and, so long as the deductible was
not apparently exceeded there would be no need to definitively determine allowability.

When the MA is notified that a medicine
or procedure had been purchased, it would send to the patient Federally-approved
information on cost and indications for the medicine or procedure. This
information for all procedures would also be available on the web.

The information sent would include the 10 and 50
percentile prices-paid information for the neighborhood of each provider of the procedures
or medicines. This information should make it possible for patients to shop for a
satisfactory price, a task which is made very difficult today, even for holders of
HSAs, by the imposition of PPO network prices by the insurance companies who
provide the high-deductible policy required to be purchased as an adjunct to the patients' HSA.

From a political point of view, the HFA
vouchers could be regarded as a "Democratic" addition to level the “Republican”
HFA/HSA playing field for the poor. The vouchers extend benefits to the young and to
the poor; having an HFA for all helps ensure that a robust market mechanism
exists.

Medicare, Medicaid and SCHIP would be
replaced by the combination of the universal HFAs, high-deductible insurance,
and the BMP safety net.

It is expected that in the
steady state, after 21 years, that less than the current percent of GDP spent on
health care would suffice for this plan because of simpler bookkeeping, because
of cost reductions due to competition for the HFA holders' dollar, and because
of reductions in demand for low-value expensive procedures due to individuals
being more thrifty with their "own" money.

The virtues of this plan are that costs
would be contained through competition, because, with the risk abatement
inherent in the supplemented HFAs many persons would not choose comprehensive
insurance and instead would choose only high-deductible insurance. Thus they
would mostly obtain medical care under open Fee for Service so that a market
could develop at the procedure level. Good health care would be available to the
poorest, preventive care would be encouraged, particularly by the annual $200
use-or-lose voucher, and there would be few waiting
lines.

To a first approximation, the
administrative costs of the HFA system should be less than that of a
single-payer system since for most procedures, for high-deductible policies, there would never be the need to
determine if the procedure were medically necessary. This would be required only
if the high-deductible limit were exceeded, so there should be considerable
savings over most other systems. I expect that costs of keeping track of a
patient's voucher, sending consumer information about treatments, estimating
percentiles of procedure costs, etc., will be comparatively small and trade off
against the diminished need to check for fraud and to set prices.
(top)

RISK AVOIDANCE CONSIDERATIONS Some
risk-averse individuals will continue to buy comprehensive insurance even though
it is not the best value from a financial point of view, and even though they
run very little risk of being without care without it.

On the other hand, most people will
realize that they are almost fully protected from any health change by the
combination of their HFA and their high-deductible insurance; and will feel that
they are doing better than those with high-deductible insurance because in
almost every year they will be out of pocket less than those who have comprehensive
insurance. I expect that after the transition there will be far fewer persons with
comprehensive polices than there are currently.
(top)

Each person would have
an account with the Federal Government, State Government, or Private Institution
for their HFA. These paying institutions we will call “Medical Accounting” (MA)
institutions. A large list of procedures and prescription and over-the-counter
drugs would be authorized to be charged to these accounts. (Perhaps not
facelifts, or extensive psychotherapy, but including dental care, glasses,
hearing aids, preventive care and long-term care, and perhaps health clubs.)

The patient could use any licensed doctor or hospital in the US. Perhaps
consideration should be made for licensed overseas providers.

If the patient wanted
their bill to be covered by their HFA (they are free to pay the bill directly,
out-of-pocket), the provider would send a copy of the patient's bill, perhaps simply using
the patients HFA debit card, to the MA processing office which would pay from
the voucher up to the 50th percentile for the same procedure charged by other
providers in the provider's neighborhood. (Note that the provider's
neighborhood is not necessarily the same as the patient's neighborhood.) The MA
would charge the expense against the HFA (or "use or lose" voucher, see below).

Note that the 50th percentile is not the same as 50% of the typical payment, it
is, of course, more likely to be almost equal to the typical payment.

Suppose that the price
of an office visit in a neighborhood which contains 1000 doctors is as in the
table below:

Number

of Doctors

Price of

Office Visit
$

50

20-30

150

31-40

300

41-60

300

61-70

200

71-100

In this table, assuming
that some doctor did charge exactly $60, the 50th percentile, aka the median,
would be $60 since 500 doctors charged $60 or less and 500 doctors charged more
than $60. The 10th percentile would be between $31 and $40.

To calculate the average price, we would have to know the actual price each
doctor charged, but if the prices were uniform in each interval, calculation
shows that the average would be ~$58, fairly close to the 50th percentile in
this case.

Simply stated, the 50th percentile is a dollar figure at or below which ~50% of
providers are charging; similarly, the 10th percentile is a dollar figure at or
below what ~10% of providers are charging. The difference between the 50th and
10th percentiles may be quite large, or may be negligible, depending on the
distribution of prices among the providers.

To obtain the data
required to determine the 50th percentile, once a year each provider, would be
required to report to an MA the median price the provider received for each
procedure they actually delivered. Perhaps the list of procedures for
which data was provided could be
restricted to those 50 most frequently provided by the provider.

Such "payment
received"
data is currently generally unavailable because HMO and PPO organizations regard
the data as proprietary. It seems plausible that government intervention will be required
to produce such consumer-useful statistical data. Similarly, of course, drug stores would have
to report median prices received for drugs (perhaps only prescription drugs),
opticians for glasses, etc.

As a second approach,
instead of being required to provide the median data directly to the government,
the government could simply require that each provider post the price they will
accept for any procedure they offer. It is thought that posting of such prices
would rapidly lead to a narrowing of the price range.

Then the
government, and possibly private consumer organizations could gather these data and make
them usefully available to consumers.

For example, imagine a web page on which the patient enters their zip code, the procedure
desired, a price threshold, and a distance threshold and a map would result
showing all providers meeting the criteria.

Note that a patient
might choose to travel to a less expensive part of the country, or find an
especially low-overhead, high-volume provider for an expensive procedure, in
order to find a provider who would require a lower deduction from their HFA.
Note also that it is in the patient's interest to use providers who charge
below the 50th percentile because that will result in a smaller deduction
from their HFA. There is no strong incentive to seek a provider who will
charge exactly the maximum (50th percentile) payment available from the HFA.

Instead of having their HFA reimburse the provider, the patient could pay the
bill directly and send the receipt to the MA office, which would reimburse the
patient from their HFA account.

Or, a third alternative, it would be possible to have the patient simply
withdraw money from the MA, perhaps via "HFA checks" as they needed to pay cash
to the provider. Then, accumulating receipts, the patient would be prepared, if
necessary, to justify to the Internal Revenue Service that all withdrawals were
spent on medically necessary items.

However, paying with withdrawn cash, may be an invitation for
individuals who are not wealthy to use the medical funds for food, clothing,
entertainment, etc. The IRS is unlikely to scrutinize returns for items below
the deductible, i.e. those that
will not increase tax revenues. In addition, even well-off people would rather use
health funds for
non-health items when they are well; for example, consider how many employees
use sick leave allotments for regular days off.

Therefore, it seems desirable that most medical expenses paid with the HFA (not
out of pocket payments) pass through an MA for payment. With a debit card type system,
this should be minimally restrictive.

Perhaps a suitable compromise would be for the IRS to not require documentation
of expenses which passed through an MA; but in an IRS audit, documentation would
be required for expenses which were funded by cash withdrawn from the HFA. This
policy should encourage people to use their debit cards, and reports from the MA
of high levels of cash withdrawals should provide a flag indicating fraud to the IRS.

From a positive point of view, the option to use cash withdrawn from the HFA
for health purchases will enable patients to obtain products which are allowable by the IRS but may
be denied by the MA because, due to some bureaucratic bungle, it was not on the
list of approved medical products. The cash option would also make it possible
to obtain privacy, to the extent that documentation would only go to the IRS,
and even then, only in case of an audit.

The HFAs could be regulated by the states. However, of course, the lifetime,
guaranteed-renewable insurance policies themselves must be portable from state
to state.

Once a month the MAs would send statements to the patient showing the costs
incurred and the amounts left in their yearly voucher and HFA accounts.

In addition to competing
on price, a provider might
compete on convenience, perhaps offering weekend and evening hours or perhaps
videophone or email consultations, possibly for extra expense; or possibly not,
in order to gain market share.

In addition to competing
on the basis of cost and convenience, as discussed above, providers could also
compete on the basis of quality. For example they could cite board
certifications, number of procedures provided per year, and quality of outcomes.
For superior quality they could ask a higher price.

This sort of competition
would represent an improvement over the status quo where competition at the
procedure level is mostly
on cost as negotiated by the insurance company, and in which providers are denied access to patients unless they promise
insurers a low cost.

In the status quo situation, providers can only make
profits by increasing the numbers of procedures executed, and minimizing, below
the contracted cost, the actual cost per procedure. This minimization is likely
to lower quality; and there is no immediate penalty for such lowering of
quality; although in the long term, of course, the patient's health may suffer.

In our suggested plan providers can charge each patient any amount. For example
they might charge poor patients less and rich patients more.

Of course, it would presumably be illegal to, for example, charge different
racial groups different prices.

The "neighborhood" (the
provider's neighborhood) over which the percentile is calculated will vary
according to the procedure. For example, for general practice office visits the
neighborhood would be local to the provider, since such trips must be made
frequently.

For difficult operations, the metropolitan area of the provider
could be suitable, or even the entire nation. For long-term care, a state or multistate region might be
suitable.

A result of this might be that those few poor city patients in the
Basic Minimum Policy (BMP) safety net which pays only to the 10th percentile, (see below) would tend
use the less expensive long-term care facilities in the countryside.

One can imagine patients
scanning the data for a metropolitan area for the general practitioner with the
lowest weekend 50th percentile cost for a physical examination and traveling well
outside their neighborhood for that purpose.

Having the MA pay from
the HFA only up to the 50th percentile reduces the possibility that some
patients would rapidly spend their voucher mostly for the prestige of being
attended to by famous doctors or by expensive "society" doctors. In addition,
this mitigates the possibility that some doctors might purposely raise their
rates to attract such poor customers and thus, indirectly, raise the overall
costs of healthcare.

Since at the initiation
of the voucher system there would be no persons in the BMP safety net, a fairly
free market in procedures should spring up and a full distribution of costs for
a fixed procedure should develop. This will provide the statistical foundation
for estimating the 50th and 10th percentile
points for individual procedures.

It is sometimes
suggested that doctors initially charging below the 50th percentile will raise their rates to the
50th percentile since the HFA will pay only up to that amount. This seems unlikely to
occur since some patients will want to pay less than the 50th percentile to
conserve their HFA and to avoid dropping into the BMP safety net, and will seek
out doctors who do charge less. Furthermore, I would expect that groups of
doctors would form new organizations to deliver care at prices lower than the
50th percentile in order to
gain market share and make greater profits through greater volume and reduced
costs. This also would ensure that costs would not stick at the 50th percentile.

Some anti-monopoly
regulation by the government might be necessary to ensure this. Economists
should study the expected market development using techniques similar to any
which would have predicted the course of prices and changes in business
practices under telephone and airline deregulation.
(top)

When people use up their
annual use-or-lose voucher, HFA, most assets, and are without a health insurance
policy, or have exhausted their health care policy; they would receive a Basic Minimum Policy
(BMP) as a safety-net system. (They would, of course, continue to receive the
annual $200 use-or-lose preventive care voucher.) The basic idea is that the BMP
would be awarded for those who are so poor that they would have qualified for
welfare and/or Medicaid in the past.

The BMP will have
characteristics much like the policies that all other citizens have purchased,
but will not be so desirable that citizens will squander their HFAs feeling that
they will nonetheless have as good care when they have a BMP. If a citizen
has had to cease paying premiums on an existing policy because of poverty, and
begins drawing on a BMP, then the government should guarantee that they be re-offered
their original policy on the original terms when they emerge from poverty.

The BMPs' features are
to be determined by a survey of what is purchased on the open market and not by a
political process. Thus their features will not be subject to lobbying by special interests.

The procedures covered
by a BMP would be restricted to those offered in 95% of all private health
policies in the US. In this sense the procedures offered would be a consensus of
those procedures determined by the market to have sufficient value for money.
The formulary would probably include only generic drugs, with, perhaps a very few
exceptions for those cases for which there is no plausible generic counterpart.

Since insurance policies
are generally written in terms of what is not covered, a better way of
characterizing what is covered in the BMP would be to not cover anything is
explicitly not covered in 5% or more of health policies. For example, if
psychotherapy is explicitly not covered in 20% of US health policies purchased
in the market, it would not be covered in the BMP.

The allowed BMP payment
would be at the 10th percentile for the region of the provider. (This is in
contrast to payment at the 50th percentile which is the threshold for payments
from an HFA.) In addition,
although only payments at the 10th percentile would be available from the BMP;
that level of payment would guarantee that providers who will provide the
service at the 10th percentile do exist near the patient. The patient could
supplement this payment with other money, if possible, from charity, friends or
family, to obtain the services of a more expensive provider.

Since only a few individuals should be
in the BMP safety net, there should be sufficient providers to meet the need. At
the 10th percentile, by definition, 1/10 of all doctors in the neighborhood
provide services at that price.

The annual deductible
would have to be set at a low value, since this is a safety net policy. I
suggest a deductible of $1000 accompanied by a Federal supplemental deposit of $1000 into
the patient's HFA. (Presumably the HFA is near-empty, otherwise there would be
no need for a medical safety net.) This should encourage the patient to shop
carefully even after the award of the BMP. The patient could use this HFA money to pay
for visits to providers that charge above the 10th percentile.

The lifetime maximum
benefit would be the value at the 5th percentile of all private policy lifetime
maxima in the US. In this sense this maximum benefit would represent a minimum
acceptable lifetime maximum benefit.

Should the lifetime
maximum be exceeded for someone with a BMP, additional expenses would have to be
provided "free". That is, they would be cost-shifted by the providers, as is
often the case at present. The total amount of such cost shifting should,
however, be far less than at present because far fewer individuals will find
themselves in this situation.

A person would try to
avoid falling into the safety net because they would likely have to change from
their usual doctor (unless that doctor offered to reduce their fees for, e.g.
needy long-term patients). It would also be undesirable because patients would
likely have to travel longer distances because, of course, only 10% of the
doctors perform procedures at the 10th percentile of cost.

The fact that the
consensus list of procedures for which the 10th percentile payment is authorized
under the BMP will be substantially shorter than that which could be purchased
with HFAs or cash, ensures that many of the cost control features of the
system will be retained and there will be incentives for persons to buy
insurance to avoid falling into the safety net in the event that
they contract a serious illness.

It is likely that this list of safety net
procedures will contain many fewer procedures than is available today under
Medicaid.

Although it is true that
the reduced benefits available in the BMP are crucial to the success of the
overall plan; and although it is true that this reduction is vulnerable to
political attack; every health plan is vulnerable in this way wherever in the
plan the reduction in benefits aka rationing is, in fact, embodied.

There is always
political pressure to increase benefits. In the HFA system, the weak points are
clearly isolated in the value of the yearly HFA voucher increments awarded from
birth to age 21, and in the
procedures available in the BMP safety net.

The BMP procedure restrictions are,
unfortunately, easy to attack because they are so visible. However, because very
few people will fall into the safety net, and, because of the clear rationale
for the restriction and method of selection of procedures, they may also be
relatively easy to defend. It will be worth pointing out that 5% or more of
policies sold on the open market also do not offer some procedure not available in the
BMP.

Licensing of providers
should ensure that the 10th percentile providers meet minimum standards and thus
have low costs principally because of such reasons as low overhead,
efficiencies, and large volume.

It is to be expected
that many moderate quality low cost providers would emerge in order to take
advantage of high volume, much as Walmart replaced many moderate quality small
retailers. There is no reason to think that the 10th percentile providers would
necessarily be degrading to patronize; licensing should maintain overall
quality. The offices may be spare and simply furnished and in low-rent areas.
The doctors may have set up procedures whereby less completely trained personnel
perform preliminary screening; or they may make extensive use of computer
diagnosis, etc.
(top)

The MA should also
include with the report of the bill to the patient the median local, state, and
national charges for the procedures used by the patient that month, broken out
as to whether the provider had various quality characteristics such as board
certification. This information should help the patient decide if their doctor's
charges are reasonable. To further assist in this decision there should also be
included indications, details, and perhaps some outcomes results for the
procedure.

This consumer
information should also be available generally on the web, in libraries, etc. to
enable consumers to select doctors, hospitals, and procedures in advance of any
illness.

Because patients would
more often be spending their own HFA and out-of-pocket money under this plan they will question their
doctors more closely about the relative efficacy of inexpensive and expensive
procedures; for example comparing physical therapy to an initial MRI
as treatment for back pain. When the doctors confess, as they must in many
cases, that it is not clear which is best, the patient will likely choose the
less expensive procedure, and may in many cases, exert pressure for further
studies of comparative effectiveness. It is generally agreed that such studies
are relatively underfunded.

The consumer information
sent to the paying patient could also be generally available to consumers upon
request so that they could evaluate the doctor's approach before treatment. It
might also be required that insurance plans provide their patients
with this information after every procedure so that they could evaluate at the
end of each year whether they had obtained their money's worth from the
insurance.

The collection of MAs
need not be a large bureaucracy; it should be similar in scale to the Medicare
or Canadian bureaucracies which are often said to be small and efficient. In
fact, it should be smaller than those organizations, since it has no mandate to
control costs, and almost no mandate to restrict funding of procedures.
(top)

A political virtue of
this funding approach is that if Congress wanted to steadily increase or
decrease the share of government tax resources devoted to medical care, they
could do so by increasing or decreasing the value of the yearly voucher for
those under 21, without facing the politically more difficult task of choosing
between procedures or beneficiaries.

For those over age 21 it should also
be possible for Congress to target aid to those in specific need, for example
the unemployed, by simply adding funds to their HFAs. Or, it may become apparent
that there is a need for all citizens to receive an additional HFA voucher of some size
each year.

The expectation is that
a person would look for bargains and would not squander their HFA because they
would want to conserve it for some later need, and because, at death, after age
21 the HFA would pass to their estate. Early (2008) experience with MSA and HFA
employer group insurance indicates that the desire to conserve the voucher also
encourages preventive care and good health habits. The search for bargains would further encourage competition and thus control costs.

It is often argued that
patients cannot look for bargains when they are extremely sick, when most of the
money is spent, and thus regular market forces do not apply to medical need.
However, the patient may survey advertised prices of doctors and hospitals,
weigh those against quality and tell their relatives and friends in advance
where they should be sent in the event of an emergency, if possible.

In addition, any
insurance bought on the open market may be less expensive if the insurer can
specify cost-efficient doctors and hospitals to be used if possible.

Insurance policies could
also include rebates to patients for selecting less expensive hospitals for
elective or emergency surgery, such as a coronary artery bypass, as discussed by
James Pendleton. Such rebates can be substantial, reflecting very large
savings for the insurance company. Of course these savings can also be reflected
in lower premiums and will doubtless lead to reduction of existing large
differences in hospital charges. Depending on law, the rebates could be taken as
cash or be added to the patient's HFA.
(top)

Also, each person would
be given a "use or lose" voucher allotment, say $200, each year (stagger using
birthdays to avoid an end-of-the year rush.) This also would encourage
preventive medicine. This would ideally be spent on dental and eye checkups, and
on such other procedures as blood pressure measurements and pap smears.

Many useful medications
are non-prescription, such as aspirin and Prilosec, and these too should be
covered by the use-or-lose voucher (as well as by HFAs). It would also be
desirable if the IRS could modify its rules so that exercise club fees were covered;
it's likely that these would have to be capped.

Currently, many
preventive procedures are covered free by high-deductible policies which
accompany HSAs. This "routine" care would ideally instead be covered
out-of-pocket so that prices are controlled by the market. If these preventive
procedures are covered by insurance, providers are likely to keep their costs
high. The "use or lose" voucher strongly encourages preventive care, but keeps
it in the market. Providers will include cost among their inducements to
potential patients.
top)

The HFA system should
change the current motivational structure in which doctors resist para-professional
personnel for fear that they will displace the doctors. Instead, some doctors
will likely head organizations trying to lower costs in order to gain market
share. It has been suggest that it may be necessary to modify anti-trust laws to
make it possible to create such organizations.

Since doctors may charge any amount,
the best doctors income may rise. Due to competition, the salary of less able
doctors will decline.

It may be that in rural
or inner city areas where there are only a few providers the 10th percentile
may be the same as the 90th percentile. In this case, the only restraint on cost
would be the
apprehension of
doctors that, if they raise their prices, doctors will
move to their neighborhood or that patients will travel away for care.

Looking at this from
another point of view, there should be sufficient HFA wealth available in rural
or inner-urban areas so that prices can rise to a level such that primary and other doctors will be
interested in practicing in rural areas. Thus, various artificial government
mandates for selected recent medical school graduates to practice in rural or inner-city areas should no longer be
necessary. Also, the increase in average primary care doctor's salary, due to
demand, should result in a substantial increase in the number of new doctors
specializing in primary care.

Existing primary care
doctors may choose to offer a lower price for patients who agree to an initial
screening by physician assistants or registered nurses. Or a new doctor may
offer low prices to build his or her practice. Such system changes in
response to a new ability to pay should quickly increase the overall level of primary
care available.

Under the HFA
approach, there would be no more persons in Medicaid. Thus this transition is as
"instantaneous" as the bureaucracy can make it.

However, as HFAs
are exhausted for some individuals, and perhaps as they allow their insurance policy
to lapse due to carelessness or to inability to pay their premiums, the
equivalent of Medicaid will re-appear as the BMP safety net program; however, as
discussed above, the
BMP safety net would be less generous in terms of procedures covered, than
Medicaid is today.

However, in the old
tradition of medicine, doctors could donate services for uncovered procedures or
for uncovered costs above the 10th percentile to those in the safety net. This
is a tradition not often seen today where the government is expected to pay all
bills if private insurance does not.
(top)

Private comprehensive
(aka low-deductible, low-coinsurance, low-copay) insurance could be purchased
with HFA funds. (Under current law HFA funds cannot be used to purchase
insurance.)

It is clear that many persons do prefer comprehensive insurance, as
evidenced by purchase of Medigap insurance to supplement Medicare, even when
the patients are aware that a
large portion of their premiums will be used for administrative expenses.

However, this devotion
to comprehensive insurance will likely be reduced in the HFA system. For
example, for those currently covered by Medicare, since the HFA should be
sufficient to meet expenses not covered by high-deductible insurance, the
patient need not worry about coverage for the deductible, as he has currently to
worry about not being covered by the gaps in Medicare. Thus, one would expect a
lesser expenditure by individuals on comprehensive insurance, and greater
expenditures on high-deductible insurance.

Private insurance could
offer comprehensive policies which would pay to a level above the 50th
percentile. However, so long as some patients are searching for low prices,
comprehensive policies should not make it impossible to find low prices.

The administrative costs
of private high-deductible insurance should not be as great as for medigap
insurance since the high-deductible insurance payment system is seldom used. The administrative
costs should be more similar to auto liability or homeowners insurance. As
discussed previously, an expense account for most medical expenses can be
automatically maintained by consistent use of a special HFA debit card. The
account need never be consulted unless the deductible is exceeded.
(top)

The costs of private
insurance purchased with the HFA would not be controlled. The regulator would
only want to ensure that the insurance company could meet its obligations with
the scheduled premiums.

Some insurance is
required to be purchased in anticipation of the birth of a child, and must be
maintained to age 21.

The parent might pay for this insurance in order to
conserve the child's HFA. The child's voucher itself could be used to
purchase insurance and would become available for insurance three months before
the expected birth.

Obviously insurance
companies would give lower rates for insurance to children whose mother had prenatal care and
who did not smoke or drink. For guaranteed-renewable, high-deductible insurance (see below) the rate
schedule would, in effect, be set for the child's entire life.

While it might be expected that
parents who had poor health habits would pass these traits along to their
children, and hence that premiums might be higher for these children, there are
other possibilities. Since premiums will almost certainly be paid while the
child is young and is very seldom sick; the insurance company will be ahead
while the individual is young.

Individuals with poor health habits
may die while quite young and after a short illness or as a result of an
accident. So it is not at all clear that insurance companies would
charge such individuals high rates at birth.

Genetic illnesses which
were not predictable would obviously be covered as classic insurance. Genetic
defects which could be predicted or detected might raise insurance rates and use
more of a child's voucher. It would be up to the parents to decide whether or
not to have a child which it was known would be born with a genetic disease;
they would have to keep in mind that the child might eventually fall into the safety
net and that the parents might feel impelled to spend their own resources on
their children's medical care.

The fact that the
voucher/HFA would become available three months before birth will be controversial.
However, allowing this is desirable from a health policy point of view because
it maximizes the size of the high-deductible policy pool by making underwriting
possible before some pre-existing conditions are apparent. Also, the earlier
underwriting begins, the earlier the cost implications will become apparent to
parents and hence the earlier they will adopt healthy life styles.

It might be objected that insurance
companies may require higher premiums for the children of poor parents,
anticipating that their medical expenses may be higher. But it is important to
remember that the guaranteed-renewable policies will likely be valid for life.
The children of wealthy parents will still very possibly have expensive
illnesses late in life; and may also be more vigorous in seeking out expensive
treatments. Also, the children of poor parents may die relatively early of
non-chronic, relatively inexpensive, causes. Hence it is not clear to me that it
would be worthwhile for insurance companies to underwrite on the basis of parent
wealth.

The HFA may be used to
pay the premium for only one year at a time, even for insurance policies which are
guaranteed renewable. This restriction is in order to ensure that the government
is not eventually required to bail out health insurance companies
who have offered, for large up-front voucher payments, expensive long-term plans
on which they can not deliver.
(top)

The government should
encourage the private insurance industry to offer incentive-compatible,
guaranteed renewable, high-deductible insurance policies. Such policies have the
characteristic that the policies cannot be cancelled, and the premiums cannot be
raised in response to the the health experience of the individual.

Insurance companies
would be allowed to reduce rates based on good health experience in order
to prevent other companies from skimming off those customers. These premiums
could be subsequently returned up to, but not above, the initial values based on
the customer's subsequent poor health experience.

Herring and Pauly
(2004) have shown that such guaranteed-renewable health policies are viable,
(Incentive-Compatible Guaranteed Renewable Health Insurance,
NBER Working Paper W9888, ). Similar results have been developed by
John H. Cochrane of the University of Chicago. Regulators should require that such policies be
made available to consumers.

Herring and Pauly (2006)
Incentive-compatible, guaranteed renewable health insurance, J Health Econ, 25,
3, 395-417 have also demonstrated the substantial prevalence in today's free market of such
renewable health policies in states that have neither guaranteed issue nor
community rating. The policies have the characteristic that premiums
are higher at the start than needed to pay average benefits, but higher than
required toward the end of the policies.

The policies were studied only in
the age range 18-64 and were found to be viable. Further studies are
needed to determine viability in the age range from birth to death. Conceivably
government subsidies will be needed late in life; although I hope that the many
years of good health from age 0-21 when the government $2000/year HFA vouchers
are available to pay premiums can set up funds for old age.

These policies should also
be regulated so that, should the insured fail to pay premiums because of lack of
resources, and hence fall into the BMP safety net; that he or she should be
allowed to resume the original policy on the original terms when they must leave
the BMP because of renewed financial health. Probably the same policy should
obtain for those who have been unable to pay premiums on low-deductible plans.
Of course care must be taken to ensure that this renewal policy does not allow
individuals to game the system, paying premiums only when they anticipate that
they may become sick.

Obviously, if a financially healthy
individual simply fails to pay premiums, then insurance companies may impose
underwriting tests before covering them again. A sign that such an individual
was financially healthy would have been that they were not presently covered by
a BMP. To have qualified for a BMP one would have had to have demonstrated that
one could not afford premiums for a private policy.

A problem with lifetime
policies is how to handle new, expensive beneficial procedures. I suggest that,
as is normal, the insurance policies be initially written to support a particular basket
of procedures.

Should a new procedure
be very expensive so that the price of the new basket of procedures which
includes it is excessive, the insured party could be given a one-time option of
increasing their premium to cover that procedure without regard as to their
health status. (The option cannot remain
indefinitely open, since then the insured party would not choose the option
until their risk of needing the procedure increased. There could however be a
subsequent one-time option to drop a procedure and hence reduce options.)

In deciding after the
initial offering whether to insure or not, and what rates to charge, for the new expensive,
beneficial procedures the company could impose
most life-style and pre-existing conditions restrictions. (Note that premiums
for pre-existing conditions are subsidized by the government at program start-up
at the beginning of the transition, see HFA INITIATION below.)

Another approach to handle new,
expensive beneficial procedures would be simply to determine a premium path
which allows for some increase in medical costs above inflation. Those who
wanted to minimize the risk of not being able to afford future desirable
procedures could select to pay for higher rates of increase of medical costs.

Note that the fact that
the HFA vouchers are the same for all persons, and that insurance companies may
use lifestyle in setting new-customer premiums and in deciding whether or not to
reduce or to subsequently raise premiums to the original levels for existing customers, removes the necessity of having governments
monitor the lifestyles of citizens in order to prevent tax dollars from being
"wasted" on those with "sinful" or unhealthy behavior. The
only reason that the government might engage in such monitoring would be to
reduce the likelihood of individuals dropping into the BMP safety net. It is
planned that the number of such individuals will be small, and hence that the
government need not monitor the behavior of the typical citizen.

Insurance companies
could increase rates for most life-style changes, and for normal changes in
life. For example if a person began to smoke or to fly a private plane, rates
could be raised. Of course rates do increase with age on guaranteed-renewable
policies.

Companies could offer
high-deductible coverage whose rates would increase more slowly so long as participants
participated in a wellness program. Depending on politics a few life-style
changes, for example entering a risky public service job, might or might not be
disallowed in law as justification for setting rates.

Premiums might be
reduced if patients undergo various screening examinations. These might not have proved
profitable for insurance companies in the past, since patients often had moved
on to another company by the time treatment of a discovered illness had paid off
in premiums from a longer-lived customer. However, in the present situation, where people may keep a
single policy for much of their life, screening examinations may pay off for the
insurance company: the patient may pay premiums for a longer period of healthful
life, instead of dying after only one medical incident which was not caught
early enough by screening.

Due to Federal
supplementation at startup, all should succeed in obtaining a high-deductible policy
at startup. But, should they fail to keep it in force; and
should they subsequently be unable to find high-deductible insurance below a
threshold price, determined by the insurance industry, then they may fall into a
regulated high-risk insurance pool, similar to the high-risk pools presently
operating in several states. Should they be unable to afford these high-risk
premiums, then they would fall into the BMP safety net.

The high-deductible
yearly out-of-pocket limit should not be allowed to grow too large, perhaps not over 1/4 of the funds
in the HFA; a maximum of $125,000/4=~$30,000. Should the limit become larger,
then those persons who develop a chronic illness might exhaust their funds in a
few consecutive years of paying the limit. In this case they may have to use the
safety net, thus drawing on public tax funding. As noted elsewhere, it is
important that the number of citizens in the safety net be minimized.

Of course it is
desirable that the high-deductible limit be this high for at least some
individuals in order that even expensive procedures feel the market pressure of
customers who are spending their own money.

To protect against
falling into the safety net due to chronic conditions, high-deductible insurance
companies might offer policies that completely cover a chronic condition after several successive
years in which the patient had exceeded a high deductible limit to which that
chronic condition had significantly contributed.

It might be desirable to
encourage insurance companies to offer plans which only pay up to the 50th
percentile, or to offer other forms of indemnity insurance, so as to minimize
upward pressure of insurance on expensive procedures.

From the
market point of view, it is desirable that the maximum number of persons buy
health care one procedure at a time, that is, without comprehensive insurance,
so that a true market at the procedure level is created. Thus, the government
should not encourage or subsidize comprehensive insurance.

Note that this approach
to universal coverage
differs from many reform proposals which restrict market competition to
only that
between companies selling comprehensive insurance policies.

States could retain the
right to make the laws concerning insurance. The states would have to regulate
to ensure that the policies offered, in particular the initial premiums, were
actuarially sound if renewed so that the government did not have to pick up the
tab for companies which over-promised. And of course, states must allow
individuals who move to another state to take their lifetime guaranteed
renewable policy with them.

It of course would be
desirable if companies market their policies across state lines.
top)

HMOs could continue to
exist, but like other forms of insurance and fee for service, their premiums
would no longer be tax exempt. Therefore, HMO's and similar organizations may
lose market share.

On the other hand, there
would be nothing to prevent an association of doctors from advertising that they
will give discounts to patients who are referred within the group or who spend a
prescribed amount within the group. This sort of creative marketing is impossible in
our present system.

Such a group of doctors
could also ensure that other doctors in the group whose patients regularly had
bad outcomes did not continue to practice within the group.

These arrangements could
result in many of the same favorable outcomes for patients as in historical
HMOs. Since HMOs were initiated voluntarily before cost became the overriding
consideration it is today, it is plausible that HMOs will continue to be
offered. However, it is likely that, when everyone has their own HFA, HMOs will
not be the dominant mode of health care delivery as was once predicted. The
concepts of government specified capitation and risk adjustment would become
largely irrelevant.
(top)

Since rich people will
more easily be able to pay above the 50th percentile and are less likely to run out of
HFA
and out-of-pocket money, they and their children will still usually have better medical
care if they are seriously ill. But this HFA program will ensure that most prudent
persons will have nearly equal access to excellent health care for most of their
lives. Although rich people will likely always have an advantage over the poor;
at least in this system, the vouchers from birth to age 21 ensures that there is a greatly reduced health care advantage
resulting from being rich early in life as compared to the present system.
(top)

The best doctor's
incomes would probably increase since they would be free to raise their rates
over those currently paid by insurance companies, Medicare, and Medicaid.
Patients would presumably seek these doctors out because of their reputation. The income of the average doctor may decline due to competition.
(top)

A patient could always
pay the doctor out-of-pocket and not draw down their HFA if they wanted to, perhaps for
privacy or to save the voucher for their old age.

Since any patient could
choose to pay directly, and many would, this approach to medical care, as
contrasted to a plan in which care was obtainable only through payment by the
government, as in Canada, could not significantly aid in detecting illegal
immigrants. On the other hand, illegal immigrants would have no access to HFA
supplements or to vouchers and would, presumably, have free care only in an
emergency as at present.

Resident aliens would
initially receive vouchers equal to 1/4 that of a citizen of the same age and be
required to build their HFA, if employed, as are citizens. After 10 years
residence the voucher would increase to that of a citizen.
(top)

The universal HFA
supplements have the advantage over
refundable tax credits for low wage earners in that they in no way comprise
a disincentive to earn more money. They also do not increase the numbers of
individuals who pay no taxes and hence feel little personal investment in
fiscally sound
government.

Wage earners will be
required to place about 5% of wages (but not of other income) resulting in
up to $5000 per year in a HFA account. That is, the HFA is
mandatory. However, the degree of government coercion seems to me to be less
than in the mandatory Medicare payments together with the mandatory taxes needed
to support Medicaid. Taxes of this latter sort could be substantially replaced
under the HFA system since they are no longer explicitly linked to the major
government assistance, vouchers from birth to age 21.

The contributions from
wages would be mandatory until the total contributions plus return on investment
in the account reached $125,000 (inflation adjusted, of course). Once this
amount is achieved, the account would no longer need to be supplemented from
income, although, if desired by the patient, it must be later supplemented if
negative investment returns or withdrawals result in the account dropping below
$125,000. Should investment returns result in the HFA account being valued over
$125,000, the excess is distributed to the owner.

An HFA account can be
kept directly with the government or in a private institution. Money can be
spent only on health-related expenses. An exception might be made for items such
as rent after age 75. However, such possibilities should be closely examined
since, should they exhaust the HFA, they could result in the general
tax-supported government BMP safety net being required to provide for medical or
long-term care.

A principal purpose of
the HFA, and a reason for making HFAs mandatory for wage earners, is to minimize
the number of persons who fall into the safety net, thus minimizing the safety
net's additional burden on the taxpayers. Before safety net benefits are granted,
as is currently the case for Medicaid, the patient will have to certify that
their HFA account and other personal resources are exhausted.

For this reason, HFA
funds may not be transferred to another person, except that it enters the
owner's estate at death.

Also, the HFA is
mandatory because it is desired that the voucher and HFA, together with
incentive-compatible, guaranteed-renewable, high-deductible private insurance, as much as possible replace comprehensive
insurance, whether private, Medicare or Medicaid with a market-based system at
the procedure level.

If payments from wages
to the individual's HFA is mandatory,
as recommended here, employers will be naturally inclined to award any health
benefit to their employees in the form of direct contributions to the HFA. If
the HFA were voluntary, then many employers might instead continue to offer
comprehensive insurance because that is what most employees and employers are
accustomed to and because, at present, it is the paradigm for high quality
employer-provided health care.

Of course employers may
certainly continue to offer comprehensive insurance even if the HFA is mandatory.
However, the employee and employer would then have to coordinate the voucher,
HFA, and the comprehensive insurance. The complications, especially including
those involved in changing jobs, would lead most
employees to favor having the employer contribute directly to the employee’s
HFA. Since most comprehensive insurance programs also cover dependents, one
would expect that if the employer shifted to funding HFAs that they would also
fund dependents' HFAs.

Employers may choose not
to explicitly make a contribution to the HFA, instead asking their employees to
choose how much of their salary to contribute to their HFA. In either case,
however, employers will still have to pay enough salary to entice employees to
work for them.

It is important that
comprehensive insurance not dominate employees’ health plans. If it did, then
the health market would be suppressed at the procedure level, because third
party payments would continue to distort the market.

If many employers,
especially employers of the middle and upper-middle quintiles, offered
comprehensive insurance; then that paradigm would be seen to be standard and
desirable. So advocates for the poor would continue to argue that the poor also
should have comprehensive insurance. If, on the other hand, the middle-class
receives HFA-support from their employers; then the Federal government will be
urged to give the same benefit to the poor. Perhaps the Federal government would
then go beyond the income transfers so far discussed and directly place money in
the HFAs of the poor over age 21.

Also, the middle-class
are the individuals who have the time to seek out the lowest prices and thus
make the market. They also will make the best use of the information returned
from the HFA MAs to those who use the HFA to pay bills, thus
enhancing market efficiency.

Because it is desirable
from a system point of view that persons not fall into the safety net, it should
be required that the HFA be invested conservatively. Perhaps only in CDs, or a
well-balanced account of CDs and bonds.

It would not be
mandatory that the self-employed over age 21 contribute to HFAs from their
non-wage income. This is in order that they may use their limited funds,
possibly for a new business, as they see fit. Most of these individuals are
unlikely to end up in the safety net, and, in addition, there are relatively few
of them compared to wage earners so the risk that large numbers of individuals
end up in the safety net is small.

The fact that all
wage-earners would be required to contribute to an HFA will reduce the
"free-rider" problem even without requiring that health insurance be purchased.

Other individuals who do
not draw wages, e.g. non-working spouses, would be permitted to contribute up to
$5000/year to an HFA account. They would not be required to do so. Funds to
enable these contributions might constitute the "family health benefit" awarded
by employers to employees.
(top)

The 50th and 10th
percentiles need a small "buffer" so that unreasonable decisions are not made. For
example, if the 50th percentile were interpreted as "50th percentile plus $5.00"
then small purchases of aspirin would not generate complicated paperwork because
the purchase was made at a convenience store where prices were a bit high.

Similarly, why require a
patient to pay $4.75 out-of-pocket when the hospital was striving to meet the 50th
percentile on a $50,000 procedure, but failed due to unanticipated causes.
(top)

To fund the vouchers I would favor canceling all Medicare and other taxes now
going to medical care, and substituting a progressive Federal consumption tax in
the form of a tax on income not invested. (the "USA" or "Unlimited Savings
Allowance" tax, supported in 1996 by Nunn and Domenici) See also Maya MacGuineas
article "Radical
Tax Reform" in the January-February 2004 issue of Atlantic. However, this
topic is clearly out of the scope of health care policy.
(top)

Possibly, there could be
squandering of voucher enhanced HFAs if patients believed that the government
would later improve the BMP safety net. Hence it is important that the BMP not
be too generous and that not too many people fall into the safety net.

Such patients might
decide to get as much care, or engage in fraud in collusion with doctors in
order to skim off payments; such behavior is currently observed in Medicaid,
Medicare, and private insurance.

However, such behavior
would seem to be less likely in the HFA plan as compared to Medicare, Medicaid,
SCHIP, and comprehensive private insurance. In the HFA system patients are
much more likely to be spending their
own money, and hence much more unwilling to share any of it with criminals.

Children are born with a
right to a $2000 yearly voucher supplement through age 21. This is a major
advantage to a voucher approach: children get off go a good start in life with,
e.g. well baby clinics, and good dental, aural, and vision care. Note that $2000
is much less than the $7000 spent yearly per capita in the US on health care in
2008, and also much less than the ~$8,000/yearly spent per capita for a child in
the US on education.

Some employers may
respond to the government's funding of childrens' HFAs by ceasing to provide
extra salary, either directly or through dependent health care insurance, or for
depositing in dependent's HFAs for those employees with children. However,
economists often note that health care coverage by employers should be viewed
simply as a higher salary. If this is true, then the loss of employer health
coverage does not really affect the employee negatively. The extra money is
available to be placed in family HFAs.

By the same token, if
this system is in place, employers will be less inclined to be prejudiced
against hiring individuals with children in hopes of saving the company money.

The childrens' parents
would naturally administer the HFA; say until the children are 18. Parents
would choose the health insurance policy which is required until age 21. Since
children will not necessarily know when their HFA is being depleted they
might be defrauded by their parents, so the investment and dispersal of their
accounts should be closely watched by the MA, perhaps by requiring a second
opinion for long-term drug prescriptions or any expensive procedure for
children. However, it should be mentioned that, from the taxpayer's point of
view, there is less likely to be a societal fraud problem under the HFA
system than under Medicaid or private insurance coverage of the child.

Parents, of course, may
choose to add additional funds to their child's HFA out of pocket. Should the
child's HFA reach the cap, a future employer would have to choose how to make up
for the fact that this employee will not be rewarded by a benefit which
contributes to an HFA. The employee could simply be offered a higher salary,
for example. This could be standard for employees who reach the HFA cap. These
are all options for the parents and companies; the government should not
regulate these options.

Parents would also be required to take
care that any taxes on the child's HFA vouchers and HFA accounts are properly
handled. In general, even though the vouchers are taxable, the total income of
almost all children would remain below the level at which taxes would need to be
paid. Tax filing then could consist only of certifying that this was the case
and could be handled as an extra statement accompanying a parent's tax form.

Perhaps it would be satisfactory for
parents to only buy only the lower-priced "health status insurance" elucidated
by Prof. John Cochrane of the University of Chicago. The actual small expenses
which most children need could be paid out-of-pocket or directly from the $200
use-or-lose voucher or from the childrens' HFAs. Should a high expense arise,
the health status policy could be invoked and there would be insurance for
following years. However, this would run the risk of ruinous expense in a single
year; probably should not be allowed.

Because of the need to ease the immediate
transition out of Medicaid and Medicare, there would have to be a multi-year
transition.

In brief, during a
21-year transition period, all citizens would receive a Medicaid-Medicare
transition voucher of $2000/year. (Those children born in the first transition
year would comprise a small portion of this total expense.)

In addition, those
citizens who become 65 during the first transition year will also receive a
Medicare transition HFA voucher sufficient to purchase a high-deductible
incentive-compatible, guaranteed renewable policy with benefits actuarially
equivalent to the median policy available on the private market. The voucher's
value would be adjusted for pre-existing conditions. This voucher would be
awarded each year for life.

Presumably, most of the
recipients of these Medicare-transition vouchers will use them to purchase a
suitable insurance policy, but they need not do so.

During the following 21
years, each wave of citizens who become 65 will receive the same voucher for
life, except that, for each wave, the voucher's value will be reduced
approximately linearly so that it's value will be zero for the 21st wave. For
later waves there will be no more Medicare-transition vouchers.

Should the patient purchase an inexpensive
high-deductible policy, or no policy at all, any left-over HFA money could be
used to pay out-of-pocket; and any money left over at death would pass to the
estate.

Once this one start-up year is past,
insurance companies would have no obligation to sell new high-deductible
policies covering pre-existing conditions although they would be required to
renew existing ones. This would ensure that every person would have the
opportunity to start out the new system covered for high-deductible expenses for
every illness, even pre-existing ones. They will not have to exhaust their
voucher immediately to care for a chronic pre-existing condition.

During the transition, as well as after the
transition, wage earners would have to contribute to their HFA from their wages. Medicare taxes could be continued or replaced by some other
tax.

After 21 years the system will be at the
steady-state and individuals older than 21 will be receiving no
direct aid from the Federal government, except for the annual $200 use-or-lose
preventive health care voucher and the BMP safety net, should they fall into
that safety net.

It may be that it will seem necessary, at
that time, perhaps to forestall too many individuals from falling into the
safety net, to enlarge the program by providing an additional yearly voucher;
perhaps $1000-2000/year to each citizen. This would be an efficient way for Congress
to pump additional funds into the health care system.
(top)

In theory, the new
system should not result in a great increase in total medical expenses since
most known illness is currently covered by Medicare, Medicaid or private
insurance.

In practice, the new
system might result in a substantial cost increase since insurance companies
would likely offer pre-enrollment diagnostic programs to discover pre-existing
conditions so that they will be covered by the Federal government. When found, treatment
for these conditions would begin, whereas before they would not have been
treated.

However, if future severe
illnesses can be delayed, so that working life is prolonged, the average yearly cost of health care will be reduced
because there will be more premiums/illness. As a result, in the future, yearly
premiums can be reduced.

There will also likely
be a rush to get care right away because of the many procedures that many poor
people will need and be able to pay for, and hence for the first time, feel
entitled to.

Due to the increase in
demand there will likely be too few doctors, so, again, prices may go up.

Thus, indeed, prices may
go up during the first few years after initiation until several new classes of
doctors have graduated. Healthy people, for the most
part young or well-off people, will put off procedures that they do not
seriously
need, until prices decline again.

Sick people, especially
including poor sick people, will use up more of their HFA to finally get the
care that they need. It is better for the society that they pay more in the
early rush in order to regain health, substantially reducing the funds in their
HFA, than
that they remain sick and unproductive.

Costs may not rise as
much as might be expected since doctors may strive for efficiency in order to
increase market share. Even poor people may try to conserve their vouchers by
seeking low-cost providers. In addition, over the longer term, the supply of
doctors should increase since the best of them will command top dollar and their
financial success should be an inducement to others to enter the field.
(top)

There have been Medicaid
frauds with patients, in collusion with doctors, falsely claiming diseases which
require unnecessary procedures which can be reimbursed by the government. This behavior would be
less, not more, likely if everyone had an HFA
because someone's HFA, probably the false patient's, must be reduced, and that
person, when notified of the loss, will not want their HFA reduced.

In frauds, under the
current Medicare, Medicaid and private insurance approaches, only the government
or a faceless insurance company loses money. This will not be the case under the
HFA approach.

Rewards of increased
health care voucher limits could be given to persons whose information about
unauthorized charges to their account resulted in convictions.

Despite the above
remarks, a common reaction to the subsidized HFA approach is to believe that it will be
vulnerable to fraud.

Logically however, the
HFA approach is no more vulnerable than any current plan, including employer
supplied health plans, not to mention Medicaid and Medicare. The current
penalties of trial and jail terms should be sufficient to deter frauds, which
are even less in the putative patient's interest than before.

As a result of Medicaid
and Medicare fraud the government has instituted draconian criminal laws against
fraud which have occasionally resulted in honest doctors going to jail for what
were basically clerical errors. Guarding against such errors further increases
the administrative costs of health care, and makes it less likely that a medical
career will be attractive to individuals who are capable of being excellent
doctors.

Hence the HFA approach, by undercutting most approaches to fraud,
should further reduce costs, improve the skills of those becoming doctors, and
prevent the criminalization of medicine.

There is the possibility
that the patient will not use the money for medical uses. This might be
especially likely for wealthy individuals who can self-insure and hence are
happy to use the voucher and HFA as just another investment whose proceeds can
be passed on in their estate at death. But, except for the fact that the money
is not used for medical purposes, the individuals do not become a further drain
on society; so that this "fraud" is not really a serious problem.
Also, the HFA is limited to a maximum value of $125,000 and should be, by law,
invested only in very conservative fashion.

Another possible, more
serious fraud would be that a poor person might try to convert their HFA into
money for food, rent or drugs by colluding with a corrupt doctor to share a
kickback from billing a false procedure. This is serious because the patient
would then cause extra expense to society if they did become sick and
have to use the BMP safety net.

This would be a
particularly unsettling fraud and, if detected, the legal penalty perhaps should be that in the
future the HFA could only be spent for a health insurance policy. One would hope
that food stamps and subsidized housing would forestall most such fraud.

This type of fraud is
probably well guarded against by the present HFA policy of requiring only a 10%
penalty for withdrawal for non-medical policies. However it seems that we have
to give up this option if we want to keep people out of the safety net.

To reduce fraud expenditures must be easy for the IRS to check in an
audit. For this reason, it is important that most HFA purchases be mediated
through a debit card. These purchases will be easy to verify and hence, any not
purchased with such a debit card will draw attention.
(top)

There will be privacy
problems; the MA could have a complete record of a person's medical history.
However, this is already the case in principle for people on Medicare, and with
respect to states, for Medicaid. Perhaps this problem could be alleviated by
requiring records over, say, five years old to be discarded. The total fraction
of the HFA remaining would, naturally, have to be retained in the MA files. A
person could still assure privacy by paying personally for care. As has always
been the case, the actual doctors who provided care would still have records,
assuming that met with the patient's approval.
(top)

Much of a person's
HFA might still be used in the last year of their life, an unproductive use
from some taxpayers' points of view. However, in many cases much of the HFA
will have been used creating a productive life before the last years.

Since after age 75 having a comfortable place to live may reasonably be
characterized as medically desirable, and may forestall having to enter a
nursing home and more surely falling into the safety net due to high nursing
home expenses, it seems reasonable that the HFA funds could be spent for rent or
mortgage payments after age 75.

Visiting nurses, nursing home care and other long-term care should also be
approved procedures under the HFA. This will encourage people not to squander
their voucher while they are young. Long-term care available under the BMP
safety net will be at the 10th percentile and, as discussed above, could result
in the requirement to move to the country in order to find inexpensive enough
care.

An portion of the HFA
varying from 0 to 100% would go to the patient's estate if he died before age
21. The remaining part of the HFA donated by the state would revert to the
state. This is, in part, to ensure that parents take good care of their
children, and in part because persons under age 21 have not usually acquired
dependents for whom it would be desirable that they leave an estate.
(top)

Although I am not
certain at this time whether or not the following is a good idea, it might be
useful to minimize the number
of heartbreaking medical cases which can lead to individuals falling into the
BMP safety net and becoming dependent on the state, and to ensure prompt
treatment in the event of epidemics to have the federal government provide high-deductible insurance providing payments up
to the 50th percentile for epidemics, accidents and natural
disasters, also known as "Acts of God" as normally defined by insurance
companies.

This insurance would cover, for example, the next $1,000,000 after the first
$10,000 for injuries sustained in fires, floods, tornadoes, earthquakes, etc.
Auto accidents would not be covered since they are already well-handled by the
insurance industry. The first $10,000 could, of course, be covered by the
victim's HFA.

Also, victims of assaults
would receive comprehensive insurance, which also would pay at the 50th
percentile, because relatively full restitution to such victims seems
appropriate. Police and firefighters could be covered in this way.

So long as the concept
of accidents is not extended to genetic "accidents" or the "accident" of
catching tuberculosis or AIDS, the total cost of such insurance should be
relatively small.

Presumably, emergency life-saving procedures with a good prognosis would be
included under the BMP safety net list of procedures, so that a criminal,
injured during a commission of a crime and convicted of that crime, would be
covered at the 10th percentile for those procedures after their HFA had been
exhausted. The fact that the criminal might exhaust their HFA if injured in
a crime and convicted of that crime (so that the injury could not be classified
as an assault) should act somewhat as a further deterrent to crime.

Private high-deductible
insurance or the BMP would obviously not have to cover the same epidemics, natural disaster, accident, and assault risks as covered by
this possible Federal policy; at least not above $10,000.
top)

If health care vouchers/HFAs
are a good idea it does not necessarily mean that vouchers for schools is a good
idea since there is no "community" question in health care. However, it is
apparent that a very similar set of vouchers could be created for education. The
fact that most of the education money would be spent while a person was young
and less qualified to make their own decisions, would be another difference
between education and health care.

The fact that at least
a high-deductible insurance policy is required up to age 21 is analogous to the
fact that education, public, private or home-schooled is required up to a late
teen age.
top)

For political reasons,
some existing expensive procedures, such as dialysis, organ transplants, would probably
have to be grandfathered in to the list of safety net procedures either for
those alive today or for those with symptoms today, even if they are not in the
BMP because they are not in 95% of all private insurance policies sold.

However, in the future,
if persons could not pay with HFA or high-deductible insurance that they have
purchased, or from other private funds, it seems plausible that procedures for
these diseases should be like all others. They either are or are not in the BMP.
(top))

This HFA approach has
many of the universal features of the Canadian system, with the additional
cost-containing feature that costs are set by competition and not by
doctor/hospital/government boards who have various conflicts of interest; and
that patients are not indifferent to cost. This should result in better cost
containment than in Canada and thus in more medical care delivered.

However the exact cost savings likely cannot be accurately estimated because, as
far as is known, there are no examples and no experiments in which a truly free
market in health care has operated in a medical high-tech society. The RAND
Study was in a market where there was no incentive for the providers to lower
costs; and most of the market was controlled by contracts between large
entities. Analysis of plausible cost savings is an object of the highest
priority and should be attempted by professional economists.
(top)

Unfortunately, by comparison to the
Canadian system, the HFA approach does have the defect that a
disastrously ill person, who can be cured by a very expensive procedure not
covered by the BMP but which is covered in Canada, and who for some reason has
not purchased high-deductible insurance will be worse off. This is the price
society must pay for the HFA system's other benefits as compared to the Canadian
system. From another point of view, the corresponding tax dollars go toward good
health for a large number of other individuals.

It may be objected that this approach to
National Health Care is not sensitive to the needs of those who become very ill.
However, those who become very ill and exhaust their medical financial resources
will in fact still receive more tax dollars than the average citizen does. This
is because, after they exhaust their voucher, they continue to draw tax dollars
from the BMP.

In addition, the citizen who enjoys good
health until their death, or who buys insurance and therefore does not exhaust
their voucher, never personally receives the full value of their HFA.

The HFA approach has the political
defect that it exhibits the rationing inherent in every system up front and puts
a specific dollar amount on the HFA voucher's value. This amount is not as
mean-spirited as it seems, however since it is less than the total that society
would expend on someone who exhausted their voucher and who then used the BMP
safety net.

The problem is one of degree; the society
should provide the seriously ill citizen more than average funding. But should
society allow that citizen to seriously compromise the health care available to
the poor or average citizen by placing a tremendously disproportionate drain on
tax dollars taken from all?
(top)

This approach has the benefit that if the
HFAs are used to purchase lifetime guaranteed-renewable insurance at birth, as all can
do with their vouchers, then if a person becomes disabled they will be covered.
Moreover, for those who are disabled at start-up, the extra-cost premiums to
cover the pre-existing conditions are subsidized by the federal government.
(top)

Research and teaching hospitals would no
longer be able to subsidize research and teaching by overcharging paying
customers through their insurers. Direct subsidies of these institutions by
government may be required. On the other hand, even the poor will have some
money in their HFAs, and may have purchased an insurance policy with that HFA
money.

It might be possible for these
institutions to charge extra (perhaps above the 50th percentile) to their paying
customers due to their high quality of care, thus minimizing the subsidies
required. The institutions would, of course, be free to reduce their fees to
those poor persons with illnesses the examination of which would be useful for teaching or
research.
top)

The HFA voucher supplement of $2000/year
through age 21 is thought by some to be too small. It has been tentatively
selected for the following reasons. The cost for family insurance is about
$12000/year. This would come to about $3000/year per person. Such insurance is
for the people, children and working adults, who the voucher plan is designed to
cover. For 40 years that comes to $120,000/person. Since costs should come down
with this plan $2000x21=$42,000 should be more than sufficient to carry the
typical person well into their working life where they begin to further build up
their HFA via wages transferred to their HFA.

In principle, the individual will have had
a healthy life to provide for old age through the HFA which will support
maintaining their high-deductible insurance; otherwise, there is the BMA safety
net.

$42,000 is on the low end of the taxes
spent per capita for public education through high school; to protect that
investment it seems reasonable to spend a comparable amount on health care. It
should be enough to ensure that almost every person can be launched into a
healthy working life.

If the HFA voucher is too high people will not
conserve or perhaps will not even buy high-deductible insurance. Prices will be
lower with competition, so current prices may not be a reliable guide; more will
be bought with this voucher than would be possible currently. To the extent that
we are protecting a public education investment, we want healthy working people,
not necessarily healthy retired people; so we want at least enough money to
carry people up to a healthy retirement but we may save as a society on funding
health care after retirement.
(top)

Cafeteria plans are often proposed in
which the citizen has the right each year during an "open period" to choose
between several health care insurance options. A recent (2007) such
plan is the Healthy American's Act suggested by Senator Ron Wyden of Oregon. A feature of this
plan is that an HFA + high-deductible health care policy option may be offered.
This plan must, however, be "actuarially equivalent" to the more standard plans
which are to be much like a standard PPO policy.

Wyden's plan has the desirable feature of removing insurance from the domain of the employer,
and of placing health care on the same tax status as other goods and services.

Industry is finding that the HFA option
typically offers care at less expense for their employees. Hence it is likely
that those choosing the HFA option will accumulate the marginal "actuarially
equivalent" money in their HFA. Unfortunately, under the Wyden plan, rational employees will also
likely put off expensive procedures until they have switched to a more
comprehensive policy during the annual open season. Then, after they have
undergone the expensive procedure, they will switch back to the HFA plan in the
next open season. This will likely result in an instability or death spiral in
which most citizens end up in the HFA option.

The instability might be reduced if
citizens were allowed to switch back into an HFA policy only if they had stayed
in a PPO policy for several years.

Wyden's plan might be regarded as a first
step toward the plan advocated here if it were modified to require, not just
allow, an HFA option to be offered. Many citizens would take up HFAs, and likely
a substantial market would emerge at the procedure level. Many of those who
initially chose standard PPO packages would, over time, see benefits to
themselves of the HFA option.

Representative Paul Ryan (R-WI) has proposed the "Patient's Choice Act" (H.R.
2520 in 2009) which has many of the desirable features of the Wyden plan, but
which also has a particular same defect in that there is annual open period
for guaranteed issue together with no requirement to purchase insurance. Hence many
individuals will not buy insurance until they become sick.

This defect could be corrected in both plans by
government encouragement of suitable use of guaranteed-renewable, incentive
compatible private policies. Such policies would eliminate the need for
underwriting for most individuals.

As discussed above, one of the principal
benefits of the HFA voucher approach is the resistance of HFA holders to
fraud. There may be a tendency for poor individuals to be encouraged by
criminals to select comprehensive insurance options so that they may receive a
share of the fraudulent proceeds.

Senator Obama during his presidential
campaign suggested that health insurance be mandatory only for children; this is
similar to the plan suggested in this proposal.

President Bush offered in
early 2007 a
change in tax policy under which "families with health insurance will not
pay income or payroll taxes on the first $15,000 in compensation, and singles
will not pay income or payroll taxes on the first $7500. At the same time,
health insurance would be considered taxable income. This is a change for those
who now have health insurance through their jobs. Many of these ideas were also
found in Senator McCain's health plan suggestions during his 2008 presidential
campaign.

Governor Schwarzenegger has proposed
(January, 2007) a universal health care program for California. His program does
not seem to offer an HSA-type option for individuals. If it did so, then his
program could serve as a state-experimental step toward the national approach
outlined here.

David Goldhill, in the September 2009
issue of The Atlantic has published an
article with a
good analysis of the defects of our existing health care system and with
recommendations for reform with similarities to the approach outlined here.
Perhaps our agreement can be traced to the facts that both of us come from
backgrounds completely disjoint from health care, and that both of us were
motivated by the real-life experiences of relatives.
(top)

The HFA is not transferable because it
seems that allowing transferability would place too great a moral burden on
individuals to gamble that they would not need health care and give the HFA
away. Also, then the donors themselves may fall into the safety net and the
total cost to society will be put off to a later time. Of course, one is
free to give any other non-HFA money one may have. In the case of parents,
for example, they may mortgage their house and take out loans if they are
willing to sacrifice for their children's health care to this degree. This
option might not be available in the Canadian system where all expenses are
required to be paid by the state in the name of equality.

Such a problem exists today in the US in
the case of kidney dialysis, where it is difficult to use personal funds to
obtain the higher level of dialysis which provided in Europe and Japan and which
is known to increase life expectancy over that which is available under the US
dialysis practices funded by Medicaid.
(top)